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BP Business Economic Loss Claim Appeal 2017-1031: CA’s Discretion Allows Determination Claimant Not a Member of Oil and Gas Industry

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The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms

Claimant received an award from the Settlement Program of $606,853.23, pre-RTP. BP appeals alleging that the Settlement Program failed to properly address whether Claimant was excluded as a member of the oil and gas industry. BP asserts that Claimant is an engineering, design, and inspection firm focused on serving the oil and gas industry, including the Gulf offshore industry. BP contends that Claimant’s customer list is largely composed of the some of the biggest oil and gas companies in the world, including and many others.
Section 2.2.4.5 of the Settlement Agreement excludes businesses in the Oil and Gas Industry from the Settlement Class. This exclusion applies to “establishments primarily engaged in performing support activities on a contract or fee basis for oil and gas operations.” Such Claimants fall within the excluded NAICS business activity code for “Support Activities for Oil and Gas Operations” (221210). That, says BP, is precisely what Claimant does, and therefore, Claimant’s business falls within an excluded NAICS code. BP contends that all of the services Claimant provides are focused primarily on serving the oil and gas industry. In advertising its engineering and consulting capabilities, for example, Claimant’s website touts its expertise in American Petroleum Institute (“API”) standards. Thus, BP contends that Claimant is a business in the Oil and Gas Industry excluded from the Class under Exhibit 17.
In rebuttal the Claimant points out that the Claims Administrator (“CA”) explains that the Claimant’s 2010 tax return lists NAICS Code 541600, which is not a valid
2007 U.S. NAICS Code, and the return lists the primary business services or activity as “Designs/Inspections.” The CA further notes that: “The 2010 Profit and Loss Statement for indicates that it derived $3,808,458 annual revenues from “Services Revenues.” Additional details then point out that the Claimant maintains a website and that the site, “lists its Engineering, Design and Inspection services for the industrial and petrochemical industry, including an efficient and well organized method of complying with OSHA, BSSE, and other governmental imposed regulations.” The CA then states, “NAICS Code 541690 – Other Scientific and Technical Consulting Services is the most appropriate NAICS Code for the Business Entity becauseit comprises physics, chemical and safety consulting services.”
Entities assigned to NAICS Codes listed within Exhibit 17 provide construction, distribution, drilling, extraction, maintenance, manufacturing, mining, refining, and/or wholesaling of oil, gas and petroleum products or machinery and equipment used therein. Whereas, it is important to notice that Code 541690 entities, assigned to the Claimant by the CA, primarily advise and assist businesses, (a/k/a consulting) on scientific and technical matters rather than production of physical products.
The employees of the Claimant do not construct, distribute, drill, extract, maintain, mine, or refine any products. The CA explored the Claimant’s website and determined the Claimant’s services were consistent with the definition of establishments primarily engaged in providing advice to businesses on scientific and technical
consulting services including physics, chemical and safety consulting, and therefore, the CA assigned the
Claimant NAICS Code 541690.
Claimant asserts that the record reflects that the Settlement Program did in fact fully address whether the Claimant was a member of the oil and gas industry as spelled out in the Settlement Agreement 2.2.4.5, Exhibit 17, and as further clarified in CA Policy 480 v2. Claimant concedes that although it does serve customer in the Oil and Gas Industry and when it initially began doing business the Oil and Gas Industry may have represented the majority of our customers, but for at least the past 17 – 20 years that industry has been a small portion of its business in comparison to other industries. This panelist finds that the CA handled this claim appropriately and within the bounds of the discretion afforded him by the Settlement Agreement and applicable policies thereunder. BP’s appeal is denied.

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